Turkey: Rising Star in Global Trade: Northern Iraq (Branch Opening Procedures to be Followed by Turkish Companies in Erbil and Suleimaniyah)

Last Updated: 21 January 2011
Article by Akdogan | Uslas Attorneys At Law

Any reasonable man would admit that material changes in a country's political state and high profits in business always go hand in hand. For the last few years, this hypothesis has not been more proven anywhere in the world than it has been in Northern Iraq. As the part of the country which was least affected by the American occupation, Northern Iraq has been in a phase of reconstruction and booming trade for almost a decade.

Turkish businessmen have incontestably been playing a major role in the aforementioned economic development. Nowadays, wherever you go in Northern Iraq, a strong Turkish presence is easily recognized, especially in construction projects. Even Ibrahim Tatlises, a famous Turkish singer well-known for his oriental melodies and tenor voice, embarked on a huge construction project in Erbil in 2010. Other than construction, commodity trade is also very active as almost everything is imported. Another sign of Northern Iraq's skyrocketing development is the fact that major Turkish banks have recently made applications for establishing branches in cities such as Erbil. The state-owned Turkish Airlines' application for launching direct flights to Erbil is also noteworthy.

Considering the above, a main question comes to mind: What makes Northern Iraq so attractive in terms of business? Below are the main reasons for the latter:

  1. Lack of regulation: As known, Northern Iraq is relatively independent from the rest of the country. It has a separate local government which is quite busy enacting new laws all the time. Despite the latter, there is still a huge gap in terms of regulation, which whets investors' appetites. Being a symbol of pure capitalism, deregulation has been quite popular in the West for years. Well, Northern Iraq is far ahead the West in terms of deregulation because there is simply no sufficient regulation in many fundamental areas.
  2. Rich local population: Cities like Erbil are to be completely rebuilt and home to thousands of wealthy families who want to get rid of bad war memories as soon as possible, live in beautiful houses, wear branded clothes and thus who are ready to spend much money in realizing these wishes.
  3. Gateway to Iranian market: Maybe the most unheard but the primary reason for Northern Iraq being so important is its Iranian border. Most countries in the world are banned from exporting directly to Iran due to the UN embargo. Therefore, companies who want to export to Iran first export to Iraq and then arrange the shipment of their goods to Iran as a means of circumventing the embargo.

Despite the aforesaid, doing business in Iraq is not always easy. Having good local connections is key to seamless business conduct. Consequently, when investing in Northern Iraq, it is very important to hire "the right guy". Turkish companies, which want to establish a presence -either a branch or a separate company- in Northern Iraq, should particularly prefer to work with Turkish law firms with a presence in Iraq because communication with a local lawyer usually becomes a huge obstacle in start-up proceedings.

A dozen of documents are required from Turkish companies for establishing a branch in Erbil or Suleimaniyah. Since Iraq is still not a party to La Haye Convention of 5 October 1961, all of the said documents are first to be translated and notarized, then approved by governorship in Turkey, then approved by the Turkish Ministry of Foreign Affairs in Ankara and finally approved by the Iraqi Embassy in Ankara. Once the approval process is completed, the documents are sent to local Iraqi lawyers who submit an application to the Chamber of Commerce for branch establishment. Once the required documents arrive at Iraq, the establishment of the branch takes 10 to 12 business days.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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